Gilbert: I'm still the right man to lead FirstGroup

Business Correspondent/Personal Finance Editor

Thursday 26 July 2012

Fund chief Martin Gilbert yesterday shrugged off suggestions he should step down as chairman of beleaguered FirstGroup after only 8% of shareholder votes, the same as a year ago, opposed his re-election at the annual meeting in Aberdeen.

MARTIN GILBERT: The chairman of FirstGroup will remain in the post after only 8% opposed his re-election.

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SIMON BAIN

Mr Gilbert, a City heavyweight after leading his Aberdeen Asset Management into the FTSE-100 this year, has chaired local neighbour FirstGroup since 1995 and is said to have been urged to quit by some investors unhappy with the group's struggling share price.

"That is not the case," Mr Gilbert said after the meeting, pointing to the unchanged vote. "Clearly the rest of the board would tell me if they didn't think I was the right guy to chair the business." On the spread of his commitments, he added: "I have given up Aberdeen Football Club."On two high-powered non-executive appointments to the FirstGroup board next week, Mr Gilbert said: "The process started six to eight months ago, this was not a reaction to shareholder pressure."But he added: "Inevitably when things get tough in a business, shareholders have every right to be unhappy – I am a fund manager myself, I understand that better than most."FirstGroup has promised to sell off parts of its UK bus operations, against a background of a £2.1 billion debt, but Mr Gilbert said the debt was "more a perceived than an actual problem".He said the group had £800 million of headroom, and selling unprofitable bus businesses was needed to boost cashflow, because "we don't really want to increase debt to pay the dividend".He added: "There are plenty of banks willing to lend us money – they just don't want to lend the general public money."The chairman said he had waived a £34,000 increase on his £191,000 fee this year because a pay rise was inappropriate "when so many people are suffering in the UK".Tim O'Toole, chief executive, told The Herald he had waived a bonus of up to 100% of his £846,000 salary, because of "sensitivities to the issue of corporate leadership" and when shareholders were suffering pain. However, Mr O'Toole told the meeting: "I believe we will get this company back to the position it should enjoy as a result of our predominant position in our markets."He said the group's three substantial US businesses had made strong progress in the past year, with the rapid turnround at First Student prompting a 50% increase in annual savings estimates. He said the fast-growing Greyhound Express would in the long-term prevail over Stagecoach-owned competitor Megabus. The UK rail business was "shooting the lights out" in revenue and passenger growth, and the share price allowed no value for regaining or winning franchises up for grabs over the next few years.FirstGroup was the only operator to pre-qualify in all four current franchise tenders and would win its fair share, Mr O'Toole said, telling a shareholder: "I think it is in the Government's interest that the management team stays in the industry."On the troubled UK bus division, Mr O'Toole said the "rejuvenating and repositioning" plan was the one he had outlined at his first annual meeting. "The mistake I made was in believing the economic conditions were such that we would have the space and time to do it." A fare increase last January had backfired, he admitted, prompting the profits warning at the end of March which had seen the shares slump.The restructuring would include better buses and even lower fares where necessary, while the unprofitable operations to be sold had no particular geographic identity.Asked by a shareholder whether buyers would be so easily found for these assets, Mr O'Toole said: "We have had significant interest."He added: "I agree that Stagecoach has set some standards in local markets that we need to be honest with ourselves to make changes to equal them." Charles Stanley broke ranks with other analysts to rate the stock a medium-term buy, saying it was currently "pricing in a great deal of trouble". The shares rose 7.5p to 212.9p.

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Gilbert: I'm still the right man to lead FirstGroup

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